•In the theory of long-run growth:
•Assumes that Lconsists of entire work-force.
•In reality, some workers don’t have work even though they would like to, i.e.
•Lower the amount of unemployment makes resources more efﬁcient, im-
proves standard of living.
2 Measuring Unemployment
•Bureau of Labor Statistics (BLS) conducts Current Population Survey (CPS)
of ≈60,000 individuals.
•Survey puts each into 1 of 3 bins:
–employed: includes self-employed, family business, part-time, vacation
or temporarily not working.
–unemployed: not working who looked in previous 4 weeks.
–not in labor force: everyone else includes student, retiree, homemaker,
Deﬁnition 1. Labor force=total # of workers = # employed + #unemployed
Deﬁnition 2. unemployment rate=#unemployed
labor force ×100
Deﬁnition 3. Labor force participation rate =Labor force
Adult Population ×100.